California's housing market fell below the 400,000-level sales benchmark in August for the first time in more than two years, according to the California Association of Realtors. High home prices eroding affordability are blamed for a drop in housing demand.
Closed escrow sales of existing, single-family detached homes in California totaled 399,600 units in August, down 1.8 percent from the revised 406,920 level in July and down 6.6 percent compared with 427,630 home sales in August 2017.
"Home sales activity remained on a downward trend for the fourth straight month as uncertainty about the housing market continues to mount," according to Steve White, the state Realtor group president. "Buyers are being cautious and reluctant to make a commitment as they are concerned that home prices may have peaked and instead are waiting until there's more clarity in the market."
The statewide median home price rose 0.8 percent to $596,410 in August from $591,460 in July and up 5.5 percent from a revised $565,320 in August 2017.
"While home prices continued to rise modestly in August, the deceleration in price growth and the surge in housing supply suggest that a market shift is underway," said Leslie Appleton-Young, C.A.R. senior vice president and chief economist. "We are seeing active listings increasing and more price reductions in the market, and as such, the question remains, 'How long will it take for the market to close the price expectation gap between buyers and sellers?'"
Southern California led the state's sales decline, falling 8 percent from a year ago, while Bay Area home sales inched up 0.3 percent from July, though down 6.5 percent from August 2017. Except for Marin and Napa counties which posted significant gains, every other Bay Area county experienced an annual sales decline. San Mateo County recorded a 1.8 percent annual decline and 6 percent decline from July, while sales in Santa Clara County were up 7.9 percent from July and down 8.2 percent from August 2017.
The Bay Area continues to see prices climb even higher with Alameda, Napa, San Francisco, Santa Clara, and Solano counties recording double-digit, year-over-year price gains. The median price in Santa Clara County was at $1,295,000 in August, down 4.1 percent from the July median of $1,351,000, and 12.6 percent higher than the August 2017 median of $1,150,000.
"We are not seeing demand wane in the Silicon Valley region, but it is getting tougher for first-time homebuyers to compete in this market, where the median continues to be above a million dollars," observed Bill Moody, president of the Silicon Valley Association of Realtors. "A return to a more balanced market would be welcomed by many."
In August, Santa Clara County's unsold inventory index, which is a ratio of inventory over sales, was at two months compared to 2.2 months in July and 1.5 months in August of last year. The median number of days it took to sell a single-family home ticked up 13 days in August, from 11 days in July and 9.5 days in August 2017.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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